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Mr. John Swinney (North Tayside): Does the right hon. Gentleman recall from his experience in the previous Government whether debates about the growing disparity between duty in this country and that in some of our European neighbours ever influenced the decisions then taken to increase fuel duty sharply ahead of inflation? I seem to recall that the Conservatives did that during their period in office.

Mr. Forth: Many things happened during the glorious period of Conservative Government which I regretted at the time, or, frankly, regret with hindsight. As it happens, that policy was one of them. I never accepted the alleged environmental arguments or the effect that the policy was

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supposed to have on the product. I am not aware that swingeing increases in tax on petrol for vehicles has led to any diminution in the mileage travelled by individuals or the propensity to buy vehicles that consume a lot of petrol. The policy has been a successful revenue raiser, but it has done damn all for the environment.

Mr. Bercow: I can confirm the veracity of what my right hon. Friend has said about his attitude to excise duties. As long ago as 1989, at a conference in Nottingham, in an admirable speech made while he was a member of the Government, but in front of a private audience, he expressed his opposition to higher excise duties on tobacco and alcohol. I remember it well.

Mr. Forth: I am grateful to my hon. Friend, whose memory in these matters is legendary. I defer to him totally in what he says.

The Government's policy is disastrous from almost every conceivable point of view. Revenue is going down, smuggling is going up and our ability to regulate the product properly for youngsters is reducing.

Liz Blackman (Erewash): Is the right hon. Gentleman aware that countries such as Spain and Italy have their own smuggling problems despite having considerably less excise duty on their tobacco products than we do? Is not the logic of his point that combating the problem would mean the complete removal of excise duty? Is that what he really proposes?

Mr. Forth: The countries mentioned by the hon. Lady must deal with their own markets and domestic policies in their own ways. That is a vital principle. However, as my right hon. Friend the Member for Wells said, they must, in doing so, have reasonable, sensible and proper regard to the effects of the single European market that allegedly exists. They would have to consider possible cross-border movements of products before they made up their minds. In fact, their problem is the reverse of ours. If, as the hon. Lady says, countries such as Spain believe that they have a health problem related to the consumption of tobacco, that is a matter for them.

Liz Blackman: I was trying to make the point that their problem with smuggled tobacco goes well beyond the EU. That tobacco is also coming into this country. Logically, combating the price differential would require removing excise duty altogether. Is the right hon. Gentleman seriously proposing that?

Mr. Forth: If the hon. Lady is saying that our European partners have lousy border controls and no grip on what goes into their countries from outside the EU, I should not dispute that for a moment. That is one of the factors that we should take into account when considering our relationship with the EU as a whole--whether on asylum and immigration or on the import of products from outside the EU. She and I probably do not disagree much on that. If she says that there is a huge problem, she is probably right. Let us discuss that, but not in the context of the amendment.

I should be interested in holding a debate with the hon. Lady on the EU market in general, on whether the single market functions effectively and, particularly, on whether that EU market is properly protected from products from

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outside that are harmful either to the health of our peoples or to our fiscal policies. Those are legitimate concerns, but not in relation to the arguments that I want to make today. I do not fear to make arguments on those interesting matters--countries would do well to consider them carefully.

I do not want to prolong the debate because the points almost make themselves. However, despite that fact and even though my right hon. Friend the Member for Wells has made them in his way--as I have in mine--there is no evidence that Labour Members are prepared to accept them at all, so perhaps my hon. Friends will have to ram them home much more effectively than I could possibly do.

I have a few questions for the Minister. I hope that he will answer them in his usual courteous, comprehensive and knowledgeable way. What is the Government's current estimate of the trend in smoking in this country, especially among young people? I should like that to be on record, so that we know what the Government believe the underlying trend to be.

What is the Government's estimate of the smuggling of tobacco products by volume and by value? It is important for us to hear officially from the Minister the Government's current estimates. What is their estimate of the loss of revenue that they are suffering as a result of that smuggling?

Those key questions face the Government and, indeed, all of us. Whether the money is hypothecated to health is an important factor, but it is not crucial. The crucial factor relates to the encouragement of illegal activities--widespread smuggling and purchase of smuggled goods. Many Labour Members have raised--legitimately--the loss of any control or regulation in the sale of those smuggled products, especially to under-age people. That is one of the key questions for the Government.

When the Minister replies, I hope that he will tell the House that he accepts my amendment; if not, he will have to give some jolly good reasons why not.

Mr. Campbell-Savours: I shall intervene only briefly; the right hon. Member for Bromley and Chislehurst (Mr. Forth) has provoked me into saying a few words.

The right hon. Gentleman has not answered the point made by my hon. Friend the Member for Erewash (Liz Blackman). He should think clearly about the implications of what she was saying. If there are different tax regimes within Europe, under which a packet of cigarettes might cost 8 francs in France and 3,300 lire in Italy--a differential of about 20 per cent.--and if, moving from France to Italy, there is still a market, even with such a tight differential, does that not show that the amendment would not deal with the problem? We are doing so through this year's Budget. The right hon. Gentleman is not addressing the problem.

If a differential of only 20 per cent. is enough to incite people to trade in cigarettes, because a profit can be made simply by walking through a frontier within the EU at night, or by driving across it in a van, the right hon. Gentleman's proposals will not work.

I lived in Milan as a boy. When we were in the countryside, we used to go up to Como in the evenings, and if one stood on a bridge late at night, where the rivers

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came down from the alpine villages, one could see men carrying sacks on their back--sacks of fags, coming in from Switzerland to Italy. The differential was very little, but it was sufficient. I remember vividly that, when I was a child, the differential was sufficient to ensure that street corners throughout the city of Milan, every day of every week of every year, were crowded with people selling cut-price cigarettes that had come in from other parts of what was then Europe, not the European Union. It is going on today. In Rome, one can find cigarettes that have come in from Greece. The differential is probably only 20 or 30 per cent.

Mr. Oliver Letwin (West Dorset): Is the hon. Gentleman advancing the rather interesting argument that the size of the differential has no impact on the size of the smuggling market?

Mr. Campbell-Savours: Yes; I think that there is an argument that, as long as there is the potential to make a profit, people will trade. In the event that that is the motive--simply that there is sufficient differential to make a profit--the only way to deal with it is to take far greater measures to affect the trade.

Mr. Letwin: What reason does the hon. Gentleman advance for supposing that this is the unique case that disobeys the laws of economics and supply and demand in every other domain?

Mr. Campbell-Savours: My own experience--what I have seen and what tourists from anywhere in the United Kingdom will experience if they go on holiday anywhere within the European Union--is of fags, which invariably come from other parts of the European Union, being sold on street corners.

Sir Michael Spicer: How, then, does the hon. Gentleman explain the fact that when Canada, Switzerland and Sweden reduced their duties, smuggling fell dramatically?

Mr. Campbell-Savours: I do not know the answer to that, but I am sure that there is an explanation that is consistent with the case that we are advancing in the Chamber today. I have not studied the evidence. All I know is what I have experienced and witnessed, over most of my lifetime, within the European Union. The hon. Gentleman may talk in terms of what we are seeing today being a phenomenon of today, but it is not. It has been going on since I was a child, throughout Europe.


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